The latest round of global free trade talks at the WTO (World Trade Organisation) are heading toward the important December Ministerial meeting in Hong Kong.
US and EU leaders are hoping to see significant progress made in Hong Kong before concluding an interim trade pact in March 2006.
The crunch issue in the ongoing industrial sector talks, known as NAMA (Non-Agricultural Market Access), surrounds import tariff cuts and what type of formula they should be based upon.
Among the 148-member WTO, the proposal of a so-called "Swiss formula" has gained the widest support.
The impact of the formula, proposing a maximum tariff, depends on the choice of the percentage figure, called the coefficient (e.g. 10%=10).
The coefficient will determine the amount of reduction and will also depend on whether the formula is applicable to all products or if there are to be exceptions.
A proposal by the US and the European Union calls for a single coefficient formula with a maximum tariff of 10 per cent.
Whereas a proposal by Pakistan is putting forward a two-coefficient solution reportedly to have the backing of the G-20 group of developing countries.
The formula would use two coefficients: one for developed and developing countries respectively averaging at a maximum 5 per cent for the former and 30 per cent for the latter.
There are several other proposals for tariff reductions but the US and EU positions, calling for a 10 per cent across-the-board maximum tariff appears to be the most influential proposition.
Industry organisations have called for textiles and apparel to be separated from the main talks on industrial tariffs.
One of the leading voices calling for separate talks, referred to as the Special Textile Sectoral (STS), is Euratex, a coalition representing European textile organisations.
Separate talks are believed by coalitions such as Euratex and Global Alliance for Fair Textile Trade (GAFTT), a worldwide coalition of over 90 exporting textile and apparel companies, to be the best way forward to discussing textile tariffs.
Euratex has positioned itself opposite the calls for a two-coefficient approach to the Swiss formula.
Instead, it proposes that all countries reduce, harmonise and bind their customs duties on textile and apparel at a maximum of 15 per cent for finished products.
Furthermore, duties for yarn and fabric should be broadly compatible to current EU rates and applicable to all WTO members except for the least developed.
The STS appears to be gaining support with thirteen apparel trade groups across the American continent on 14 November urging their respective governments to follow suit.
Surging Chinese global exports would also be high on a future STS agenda, confirmed Cass Johnson, President of the US NCTO (National Council of Textile Organizations).
"The Hong Kong Ministerial must not be a guise to hand over the world's textile and apparel trade to China and to dis-enfranchise millions of workers in this Hemisphere that depend on textiles and apparel for their livelihoods," said Johnson.
The broad coalition calling for the STS believe only a separate textile sectoral negotiation can address the need for a special safeguard or other compensating mechanism against China.
